20 March 2014 Insurance

China holds promise and risk for European businesses

Moving into China may provide considerable growth opportunities, but also creates a multitude of complex risks that require sophisticated insurance coverages, says Devadas Krishnadas managing director of Future-Moves, Southeast Asia’s first dedicated foresight consultancy.

Speaking at the MDS Group’s third edition of “MDS Talks’” C-suite Summit, held in Portugal, Krishnadas, a risk and strategy expert, told the audience of 45 senior business leaders: “Strategy is about making major, difficult to reverse commitments. Making such commitments comes with a risk calculus. Calculating and managing risk is the job of senior leaders.

“Today’s globalised economy presents corporate and political leaders with a wide and complex canvas for action. Learning how to function well on the global level and having good frameworks to deal with change are critical to growth.”

Krishnadas also warned that businesses with Asian ambitions should thoroughly check their risk and insurance strategy before entering this often complex region. He said: “When executing strategy, leaders have to consider how to manage risks and not just focus on rewards. When operating transnationally, the risks cut across a spectrum and extend beyond operational risks – there are political, policy and macro-economic risks.

“Insurance is an effective and prudent method of managing risk. Providing an awareness of such risks, and identifying, classifying and calibrating them are all part of the value insurance providers can offer to clients beyond simply providing cover.”

José Fonseca, group chief executive at MDS, the largest broker in Portugal, agreed with Krishnadas’ assessment of the risk challenges for European companies investing in China.

He said: “As European companies are investing in China, they are not only facing new risks but also a very different risk culture from that in Europe. The markets are evolving to provide European investors with sound local insurance solutions for their people, assets and liabilities in Asia.”

He also emphasised that there were enormous opportunities stemming from Chinese investments in Europe, Africa and Brazil, and that relevant cover was readily available from Lloyd’s and international insurance companies.

Speaking about MDS’s operations to support clients in the region and Chinese businesses investing outside of Asia, Fonseca said: “MDS has developed both an in-house China Desk and strong local insurance services throughout Asia via the global network, Brokerslink to provide clients with the services and advice needed to successfully take advantage of the opportunities and mitigate the risks.”

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